News

From 1 May 2020, VAT on e-publications has been scrapped. Good news for those of us who subscribe to newspapers online or buy books to read on electronic devices.

The change will potentially slash the cost of e-books and newspapers making reading more accessible as people stay at home.

Newspapers will also benefit from up to £35 million additional government advertising revenue as part of the coronavirus communications campaign.

The Treasury announcement said:

Plans to scrap VAT on e-books and e-newspapers have been significantly fast-tracked in a boost to readers and publishers during the coronavirus outbreak, the Chancellor announced today.

The zero rate of VAT will now apply to all e-publications from 1 May 2020 – seven months ahead of schedule – potentially slashing the cost of a £12 e-book by £2 and e-newspapers subscriptions by up to £25 a year.

In support of the print newspaper industry, the government has also announced it will be spending up to £35 million on newspaper advertising over the next 3 months as part of its Covid-19 communications campaign to ensure the whole UK is aware of the latest government guidance and advice.

Chancellor of the Exchequer further commented:

We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives.

That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers.

With the nation staying in their homes during lockdown and schools closed, millions have been relying more on e-publications to pass time, home school and read the news. The Chancellor has opted to bring the zero rating forward to make entertainment more affordable for readers who are rightly staying at home during the coronavirus crisis – and are more reliant on e-publications as a result.

The price of an e-book will now be VAT-free. The e-book of Hilary Mantel’s The Mirror and The Light could be over £2 cheaper while the average tax annual saving on a typical e-newspaper or e-magazine subscription could be £25 or £20, respectively.

Readers, who rely on large print sizes or find physical books difficult to hold, are expected to particularly benefit from digital reading being more financially accessible.

If you are eligible, payments under the above scheme are due to be made by HMRC next month, June 2020. Readers who need financial support at an earlier date can still apply for Universal Credits as an interim measure.

Who can claim under SEISS?

To qualify for a payment under SEISS you will need to be a self-employed individual or a member of a trading partnership. You will also need to comply with the following:

• you carry on a trade which has been adversely affected by coronavirus
• you traded in the tax year 2018-19 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
• you traded in the tax year 2019-20
• you intend to continue to trade in the tax year 2020-21

HMRC have further confirmed that if you are not eligible based on the 2018-19 Self-Assessment tax return, they will then look at the tax years 2016-17, 2017-18, and 2018-9.

You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will use a risk based approach to compliance.

Finally, your trading profits must also be no more than £50,000 and more than half of your total income for either:

• the tax year 2018-19
• the average of the tax years 2016-17, 2017-18, and 2018-19.

How to claim

HMRC will aim to contact you by mid May 2020 if you are eligible for the scheme and invite you to claim using the GOV.UK online service. If you are unable to claim online an alternative way to claim will be available.

The online registration page will also be updated with the steps you can take to make it easier to claim using the GOV.UK online service.

You do not need to contact HMRC, as this will only delay the work being undertaken to introduce the scheme.

There has been considerable commentary in the media about this support initiative as business owners – struggling to cope with the reduction in their cash resources due to the COVID-19 outbreak – are finding it difficult to secure support from their bank.

Readers will be encouraged by the Chancellor’s recent comments when he confirmed that personal guarantees should not be requested for loans under £250,000.

The government’s offer to guarantee 80% of loans taken out and cover all the set-up and interest charges for the first year of the loan remains an attractive solution for businesses that need the additional liquidity.

If you are considering an application you will be required to produce certain evidence to back-up your request. This is likely to include:

• Management accounts
• Cash flow forecast
• Business plan
• Historic accounts
• Details of assets

The above requirements will vary from lender to lender.

An alternative scheme for micro-sized businesses

Smaller businesses may decide to apply for the “Bounce-Back” Loan Scheme that is now available. Loans can be obtained between £2,000 to £50,000 but limited to 25% of turnover.

These smaller loans are 100% guaranteed by government and with no fees or interest charges payable for the first year.

General Register Offices are currently operating with reduced capacity and with government guidance to social distance and stay at home, new parents are advised not to visit them. They can however still claim Child Benefit without having to register their child’s birth first to ensure that they do not miss out.

If they already claim Child Benefit, they can complete the form or add their new-born’s details over the phone on 0300 200 3100. They will need their National Insurance number or Child Benefit number.

Child Benefit claims can be backdated by up to 3 months.

This announcement is timely as Child Benefit payments increased from 6 April to a weekly rate of £21.05 for the first child and £13.95 for each additional child. Child Benefit is paid into a parent’s bank account, usually every 4 weeks.

Only one person can claim Child Benefit for a child. For couples with one partner not working or paying National Insurance contributions (NICs), making the claim in their name will help protect their State Pension.

The following announcement was recently made by Companies House:

Businesses will be given additional support to help them meet their legal responsibilities under changes announced today (16 April 2020).

Companies House will temporarily pause the strike off process to prevent companies being dissolved. This will give businesses affected by the coronavirus outbreak the time they need to update their records and help them avoid being struck off the register.

In addition, companies issued with a late filing penalty due to COVID-19 will have appeals treated sympathetically.

Today’s announcement builds on measures already implemented by the Secretary of State for Business, Energy and Industrial Strategy, which give businesses the ability to apply for a 3-month extension to file accounts with Companies House.

As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension.

1 May 2020 – Due date for corporation tax due for the year ended 30 July 2019.

19 May 2020 – PAYE and NIC deductions due for month ended 5 May 2020. (If you pay your tax electronically the due date is 22 May 2020).

19 May 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2020.

19 May 2020 – CIS tax deducted for the month ended 5 May 2020 is payable by today.

31 May 2020 – Ensure all employees have been given their P60s for the 2019-20 tax year.

1 June 2020 – Due date for corporation tax due for the year ended 31 August 2019.

19 June 2020 – PAYE and NIC deductions due for month ended 5 June 2020. (If you pay your tax electronically the due date is 22 June 2020)

19 June 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2020.

19 June 2020 – CIS tax deducted for the month ended 5 June 2020 is payable by today.

Low interest rates announced for Bounce-Back Loan Scheme (BBLS)

This new scheme announced last week, was the subject of a letter from the Chancellor (1 May 2020) to the accredited lenders who have been instructed to facilitate the scheme since 4 May 2020.

In his letter he said:

In my statement to the House of Commons on Monday I announced the government’s intention to launch a new scheme, the Bounce Back Loans Scheme (BBLS). I am writing to clarify the approach I am taking to a number of matters relevant to the design and operation of BBLS before its launch on Monday.

He followed with the following clarification on pricing:

As a 100% guaranteed loan scheme, the price of BBLS is critical to its success: together, we need to ensure that these loans are affordable and accessible. As such, and incorporating a range of data, I have come to the decision that the rate should be set at 2.5%.

Readers who have been contemplating the value of this scheme to their business will be further encouraged by this announcement on interest rates. 2.5% interest cost together with the government’s 100% guarantee, no interest cost or fees and no loan repayments in the first year, make this an attractive proposition.

However, business owners contemplating this, or any other form of loan funding should undertake a basic risk assessment to ensure this is the most effective way to fund your business during this difficult time.

We can help if you need assistance with preparing cash-flow forecasts or other projections.

Scotland announces lifeline support schemes for businesses

£100m of additional grants for smaller businesses in Scotland was announced last week, 30 April 2020.

In a published news update posted online 30 April 2020, three schemes were announced:

• £34 million Newly Self-Employed Hardship Fund, managed by Local Authorities, will be allocated to the newly self-employed who are ineligible for UK support (as they became self-employed since April 2019) – but are facing hardship – with £2,000 grants
• £20 million Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies with support from Creative Scotland and VisitScotland for small and micro creative, tourism and hospitality companies not in receipt of business rates relief with grants of up to £25K.
• £45 million Pivotal Enterprise Resilience Fund managed by the Enterprise Agencies providing bespoke grants and wrap around business support to viable but vulnerable SMEs who are vital to the local or national economic foundations of Scotland.

The Scottish Government is also providing £1 million to top up Creative Scotland’s Bridging Bursaries in the not-for-profit sector.

These are welcome additions to the other UK grants on offer to counter COVID-19 disruption in Scotland. Perhaps the Chancellor in London will take note of the Newly Self-Employed Hardship Fund as this is equally relevant to the other sectors of the UK.

Aside from the plethora of schemes to support businesses during the coronavirus disruption, employers should not forget that there is a raft of filing obligations that still need to be met. This post lists the various employer reporting obligations regarding employee benefits and expenses for 2019-20.

The following table is reproduced from the government website:

1. P11Ds – these are the forms that advise HMRC of the benefits provided by employers to employees. For example, company cars, health insurance, etc.

2. Class 1A NIC is an employer National Insurance charge usually based on 13.8% of the cumulative benefits advised on P11D submissions for employees.

Employers will be relieved to note that any Class 1A NIC paid is a deduction for tax purposes.

And do not forget the P60s

Employers have a statutory duty to provide employees with a copy of their P60 – a statement of gross pay and tax deducted – for the tax year 2019-20, on or before 31 May 2020.

We can help

Clients to whom we provide payroll and associated services will be glad to know that we will complete all of the above for you; unless you have other arrangements to handle these tasks in-house.

Please call if you need help.

High street shops and other companies under strain will be protected from aggressive rent collection and asked to pay what they can during the coronavirus pandemic.

In a recent press release a government spokesperson said:

“The majority of landlords and tenants are working well together to reach agreements on debt obligations, but some landlords have been putting tenants under undue pressure by using aggressive debt recovery tactics.

To stop these unfair practices, the government will temporarily ban the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. This will help ensure these companies do not fall into deeper financial strain. The measures will be included in the Corporate Insolvency and Governance Bill, which the Business Secretary Alok Sharma set out earlier this month.

Government is also laying secondary legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

This will further safeguard the high street and millions of jobs by helping to protect them from permanent closure during this time. However, while landlords are urged to give their tenants the breathing space needed, the government calls on tenants to pay rent where they can afford it or what they can in recognition of the strains felt by commercial landlords too.”

Under these measures, any winding-up petition that claims that the company is unable to pay its debts must first be reviewed by the court to determine why. The law will not permit petitions to be presented, or winding-up orders made, where the company’s inability to pay is the result of COVID-19.

The new legislation to protect tenants will be in force until 30 June and can be extended in line with the moratorium on commercial lease forfeiture.

Legislation will also be brought forward to prevent landlords using commercial rent arrears recovery (CRAR) unless 90 days or more of unpaid rent is owed.

The Financial Conduct Authority, the Financial Reporting Council and the Prudential Regulatory Authority have also issued a joint statement encouraging investors and lenders to consider the issues arising directly from the COVID-19 pandemic in responding to potential breaches of covenants.

Emergency legislation already introduced by government includes a suspension of forfeiture rights, which prevents all commercial tenants from being removed from their properties until 30 June. The government has also announced new insolvency measures which will provide further support to businesses impacted by the COVID-19 pandemic.

The rules that would have limited the rights of employees in key industries to carry forward any unused annual leave will be delighted by the announcement made two weeks ago. This will mainly apply to workers in key industries such as food and healthcare.

Workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next two leave years, under measures introduced by Business Secretary Alok Sharma Friday 27 March.

Currently, almost all workers are entitled to 28 days holiday including bank holidays each year. However, most of this entitlement cannot be carried between leave years, meaning workers lose their holiday if they do not take it.

There is also an obligation on employers to ensure their workers take their statutory entitlement in any one year – failure to do so could result in a financial penalty.

The new regulations will allow up to four weeks of unused leave to be carried into the next two leave years, easing the requirements on business to ensure that workers take statutory amount of annual leave in any one year.

This will mean staff can continue working in the national effort against the coronavirus without losing out on annual leave entitlement.

The changes will also ensure all employers affected by COVID-19 have the flexibility to allow workers to carry over leave at a time when granting annual leave could leave them short-staffed in some of Britain’s key industries.